Payroll Pitfalls: Lessons from a $162K Back-Wages Ruling for Plumbing Companies

When a $162K Back-Wages Ruling Hits Close to Home: Why Plumbing Contractors Should Care

Hook: The last thing a busy plumbing contractor needs is a Department of Labor investigation that costs six figures. Yet a December 2025 federal consent judgment requiring a Wisconsin employer to pay $162,486 in back wages and liquidated damages shows how easy it is for routine timekeeping mistakes to become an existential business expense.

Plumbing companies operate with crews on the road, variable schedules, emergency call-outs, and frequent unpaid small tasks—conditions that create perfect storm risk for unpaid overtime and inaccurate records. This article breaks down the Wisconsin case, explains the common payroll pitfalls it reveals, and gives plumbing business owners a step-by-step program to tighten systems and stay compliant in 2026.

Topline: What Happened in the Wisconsin Case and Why It Matters to Plumbers

In a consent judgment entered Dec. 4, 2025, a Wisconsin multicounty health partnership agreed to pay $81,243 in back wages and an equal amount in liquidated damages to 68 case managers after the U.S. Department of Labor’s Wage and Hour Division found employees were performing unrecorded off-the-clock work and unpaid overtime between June 17, 2021 and June 16, 2023. (See DOL wage-and-hour standards under the Fair Labor Standards Act.)

Why this matters to plumbers: the facts driving liability—unrecorded hours, failure to pay overtime, and insufficient recordkeeping—are the same issues that show up on service trucks, in dispatch workflows, and at job sites across the trades. The DOL is actively targeting employers with field staff, and enforcement activity rose in late 2024–2025 and continues into 2026. That means plumbing companies that ignore timekeeping weaknesses risk back pay, liquidated damages, civil penalties, and legal fees.

What the Ruling Reveals: 7 Common Payroll Pitfalls for Plumbing Businesses

Below are repeated error patterns that lead to DOL findings and litigation. If any of these are present in your business, fix them immediately.

1. Off-the-clock work

   Crew members doing prep, cleanup, on-call responses, or responding to texts before clocking in or after clocking out. The Wisconsin case centered on exactly this: time worked that wasn’t recorded and therefore not paid.

2. Uncounted travel and drive time

   Not all travel is unpaid. Drive time between job sites during the workday, required travel for training, and tools loading/unloading can be compensable. Many plumbing contractors underreport drive time or use incorrect policies treating all travel as noncompensable commuting time.

3. Incorrect overtime calculations

   Failure to calculate overtime as time-and-one-half the employee’s regular rate for hours over 40 in a workweek. Mistakes include miscomputing the regular rate when piece rates, bonuses, or flat-trip pay are used.

4. Misapplied exemptions

   Classifying field technicians or foremen as exempt (salaried, administrative, executive) without meeting strict duties-and-pay tests. In the trades, most plumbers are nonexempt and entitled to overtime.

5. Improper independent contractor classification

   Labeling workers as subcontractors to avoid overtime and payroll taxes without analyzing control, opportunity for profit, and investment in tools—factors DOL and state agencies use to evaluate true status.

6. Poor recordkeeping

   Failing to retain accurate timecards, payroll records, schedules, and policies. The FLSA requires accurate records of hours worked and wages paid; missing or inconsistent logs invite scrutiny and make disputing claims nearly impossible.

7. Managerial and software shortcuts

   Manual edits to timesheets, permissive rounding that skews pay in the employer’s favor, and permissive clock-in practices (e.g., allowing clock-ins from home without verification) create audit trails that are easy for investigators to challenge.

How DOL Investigations Work — Fast Primer for Contractors

Understanding process helps prioritize fixes. Key points:

• Trigger: A complaint, random audit, or payroll tip can trigger a Wage and Hour Division review.
• Scope: DOL looks at records, interviews employees, and examines policies and practices for the statutory period (commonly two years; three years if willful violations are suspected).
• Outcome: If violations are found, employers may be required to pay back wages, liquidated damages (often equal to back wages), civil money penalties, injunctive relief, and attorney costs. Consent judgments, like the Wisconsin case, are common resolutions.

2026 Trends You Must Know (and Act On)

Enforcement and technology are shaping compliance in ways contractors must address now:

• Increased field-worker enforcement: Through late 2025 and into 2026 the DOL signaled increased focus on employers with remote and field-based employees. Expect more investigations in the trades.
• Advanced payroll analytics: Payroll vendors and third-party auditors now use AI to flag overtime anomalies, suspicious rounding patterns, and inconsistent regular-rate calculations. Early adopters are using these tools to detect issues before a DOL audit.
• Mobile timekeeping sophistication: Geofencing, photo/biometric verification, and secure biometric features reduce off-the-clock risk. However, technology must be paired with policy; tech alone isn’t a legal silver bullet.
• State-level enforcement and AGs: States are more active. AG offices and state labor agencies often follow federal trends and can bring parallel actions.

Practical Systems Plumbing Companies Should Implement Now

Below is a prioritized checklist you can implement within 30–90 days to materially reduce payroll risk. Each item includes practical, actionable steps.

1) Tighten your written timekeeping policy

• Document requirements for clocking in/out, lunch breaks, travel time rules, and how to report missed punches.
• Include a clear prohibition on off-the-clock work and a reporting process if supervisors require uncompensated duties.
• Require employee acknowledgment (signed or electronic) and retain acknowledgements.

2) Deploy reliable mobile timekeeping with verification

Look for systems that offer:

• GPS/geofencing: Ensures crews are on-site when clocking in; helps document travel between jobs.
• Photo/biometric verification: Reduces buddy-punching and improves audit trails.
• Automatic overtime flags: Alerts managers when week-to-date hours approach 40 so approvals and reschedules can prevent unbudgeted overtime. Consider pairing these alerts with scheduling guidance from a field-operations playbook like the tools-and-labor operations playbook.
• Payroll integration: Seamless exports to payroll reduce manual edits and transcription errors.

3) Audit your pay practices quarterly

Run a standard payroll compliance audit at least every 90 days. Include:

• Random sample of employee timecards vs. GPS logs and job tickets.
• Overtime calculations check (regular rate calculation, bonuses, per-diem adjustments).
• Review of all independent-contractor arrangements and written contracts.

4) Train foremen and office staff on wage law basics

Training topics should include:

• What constitutes compensable time (pre-/post-shift tasks, travel, training, email/texts).
• How to approve edits: require written justification for all manual timesheet changes.
• How to respond if an employee reports being asked to work off-the-clock. Consider short, focused training formats (see micro-session examples in the micro-meeting playbook).

5) Standardize travel and per-diem rules

Create objective rules for travel pay:

• Define compensable travel vs. commuting for your routes and service areas.
• If paying flat-trip pay, document how it’s calculated and ensure regular-rate adjustments if necessary.
• Document training travel and pay it consistently.

6) Re-evaluate worker classification annually

Misclassification is a top DOL trigger. For each worker classified as an independent contractor:

• Maintain a contract that specifies project-based terms, payment methods, and their investment in tools and business operations.
• Re-check control elements: scheduling, work supervision, and drawings — the more control you exercise, the more likely a worker is an employee.

7) Keep meticulous records and retention policies

Document retention tips:

• Keep payroll records, timecards, schedules, and wage computations in searchable digital form.
• Keep these records for at least three years; keep basic timecards and payroll summaries for at least two years (consult counsel for state-specific rules).

Sample Quick Audit: 10-Minute Compliance Check You Can Do Today

1. Pick 5 employees who worked in the last 4 weeks; pull their timecards, GPS logs (if any), and job tickets.
2. Compare clock-in/out to first/last job arrival times. Note any unpaid time greater than 5 minutes per day.
3. Check each employee’s week-to-week hours: did any week exceed 40 without overtime paid?
4. Review one payroll run for accurate regular-rate calculations when bonuses or flat pays were applied.
5. Confirm written timekeeping policy exists and each employee acknowledged it.

Real-World Example: How Small Fixes Prevent Large Judgments

Imagine a 25-tech plumbing company with one dispatcher and simple payroll software. Techs routinely respond to emergency calls before clocking in and send photos to the office at night on job completion. The business is unprepared when an ex-employee files a complaint: the paper timecards don’t show pre-shift work, managers can’t explain blanket rounding practices, and GPS data is mixed across apps.

By implementing mobile clock-in with geofencing, a written policy banning off-the-clock work, and a quarterly payroll audit, the company can:

• Eliminate unrecorded minutes quickly.
• Document legitimate compensable travel and pre-shift prep.
• Detect cumulative overtime early and adjust scheduling or hire help before overtime accumulates.

Handling a DOL Inquiry: Steps to Take Immediately

1. Preserve records—don’t delete or alter timecards, GPS logs, or payroll files.
2. Contact your employment counsel experienced with wage-and-hour claims.
3. Run an internal payroll audit covering the period requested and be proactive—DOL responds favorably to employers who remediate quickly.
4. Communicate with employees honestly; don’t instruct them to alter statements.

Why Technology Isn’t Enough — The Policy + Practice Equation

Technology reduces errors and creates audit trails, but it isn’t a substitute for policies and supervision. In the Wisconsin ruling, the underlying issue was not a lack of clocks but unrecorded compensable work. A robust compliance program combines:

• Clear written policies that reflect actual work practices.
• Technology that enforces rules and provides verifiable logs.
• Management training so foremen apply policies consistently — consider short-format manager sessions modeled on the micro-meeting playbook.
• Regular audits that catch errors before they compound.

Actionable Takeaways — A 30/60/90 Day Plan for Plumbing Contractors

First 30 days

• Review and publish a clear timekeeping policy, require employee acknowledgments.
• Run the 10-minute audit across 5–10 employees.
• Stop any informal off-the-clock practices and instruct staff on new rules.

30–60 days

• Deploy or configure mobile timekeeping with GPS/photo verification.
• Train foremen and payroll staff on overtime calculations and the regular-rate basics.
• Document travel and per-diem rules and apply retroactively if necessary.

60–90 days

• Perform a full payroll compliance audit and correct any underpayments. Consider third-party tools and hardware benchmarking like AI analytics and performance reviews when selecting providers.
• Set a recurring quarterly audit schedule and assign ownership.
• Review independent contractor relationships and convert misclassified workers to employees if appropriate.

Final Thoughts: Treat Payroll Compliance Like Safety

Just as you would not ignore a repeating jobsite safety hazard, you cannot ignore payroll practices that leave your company exposed to large back-pay claims. The Wisconsin consent judgment is a timely reminder: even well-meaning employers can face six-figure liabilities when hourly work goes unrecorded.

Bottom line: Accurate timekeeping, transparent policies, and routine audits are inexpensive compared with back wages, liquidated damages, and the reputational damage of a DOL finding.

Call to Action

If you run a plumbing business, take action today: start with the 10-minute compliance check in this article. For a deeper review, schedule a payroll compliance audit with a wage-and-hour specialist or request our Plumbing Contractors Payroll Checklist and vendor selection guide to pick timekeeping tools that fit field operations. Don't wait—regulatory scrutiny is higher in 2026, and the cost of doing nothing can be six figures.

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